The Boodle Blog
How to start teaching kids about money
“Not teaching your kids about money is like not caring whether they eat. If they enter the world without financial knowledge they will have a much harder go of it.” Donald Trump
Every parent wants to give their children the best. Whether it’s playing classical music to them while they are still in the womb, or reading bedtime stories to pre-verbal infants, moms and dads these days pull out all the stops to ensure that their their little darlings are ahead of the pack.
Surprising then, that not every parent is on the same page when it comes to teaching children about money. There aren’t too many sane people around who would dispute the importance of money towards being an independent, happy, grown-up. And yet, some parents believe that kids should enjoy their childhood free from the financial worries that might dog their adult lives.
But what if I told you that, according to a recent Cambridge University study, children form their financial habits by the age of seven? The scary thing is that children will either learn about money in the ways that you proactively show them, or they will draw their own conclusions from looking at the world around them. In any case, learning about money can be fun for kids since they don’t have the same frame of reference as adults. So, here are some ideas that will instill some savvy and ensure your children grow up to be clued up about finances.
Children tend to think that money comes from Mom/Dad’s wallet, or from the ATM. So without the value associated with earning their own money, how can you instill more of an understanding of the significance of money? Allocating pocket money will provide children with an introduction to how they can use money. Evaluate your child’s overall expenses, for example clothing, airtime, etc. Their pocket money will be a smaller amount that your child can use to manage his/her own expenses on entertainment, stationery and so on.
A jar for saving, a jar for spending, and a jar for sharing
After the financial crisis of 2009, Sesame Street launched a campaign to teach children about money. The project “For me, for you, for later” teaches children about the concepts of finance and how to make good choices around money. Your child will benefit from this thinking in learning about putting away money for longer term savings, making a fund for more impulsive spending, and setting aside money for charity. Their choices will be evident in a visual way as they can see the money in their jars accumulate or disperse. You could really drive home the power of the rand by following the lead of OneRandMan and giving them their allowance in one rand coins.
Using the three jars will instill a sense in your child of how something very desirable can be achieved by holding on for a while. There is a marshmallow experiment that goes into exactly how difficult delayed gratification is for children, even when the benefits are clear. Another way you can illustrate how this works is by helping your child budget for something with their own money. The object should not be too expensive so that it can be saved for and purchased within a reasonable amount of time.
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